Your Five Biggest Expenses During Retirement

8.11.23: Audio automatically transcribed by Sonix

8.11.23: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Producer:
Any examples used are for illustrative purposes only and do not take into account your particular investment objectives, financial situation or needs and may not be suitable for all investors. It is not intended to predict the performance of any specific investment and is not a solicitation or recommendation of any investment strategy.

Producer:
Welcome to Money Matters with Mike, with your host, Mike Zaino. Get set for a full hour of financial information and economic news affecting your bottom line. Mike works hard each day to educate Americans like you on how to reach the financial freedom they've worked so hard for. And he can help you, too. So now let's start the show. Here's Mike Zaino.

Mike Zaino:
What's up? What's up? What's up? It's Mike Zaino coming to you from Fort Mill, South Carolina. Happy Saturday, people. What a great time to be alive in these United States of America. Money Matters with Mike is a show designed to arm you with information and give you plenty of meat on the bone to chew on each and every week. And today we are absolutely bringing the heat again. On today's show, we're going to talk about and show you how to cut costs and retire with confidence. And as always, I have the distinct honor and privilege of being joined by the one the only my co-host and producer extraordinaire, Mr. Matt McClure. Matt, how are you doing today, brother?

Producer:
I'm doing great, Mike. A little hot in in Atlanta where I'm coming to you from. But, you know, other than that, I can't complain.

Mike Zaino:
Yeah, I'm telling you, it is. At least we're not in that same heat wave that we had a few weeks ago. Right. Because, I mean, 100 degrees every day. That is that is not fun.

Producer:
It's like you walk outside, you're in a sauna. I'm like, it's not quite my idea of a good time out there.

Mike Zaino:
My wife my wife described it as living in somebody's mouth. Oh, and that's what it feels like when you walk outside. And I'm like, oh, yeah, kind of gross. I know. So I'll just.

Producer:
I'll just stay inside in the AC.

Mike Zaino:
Amen.

Producer:
That being the case, well, no. Want to thank all of our listeners as we start off here for joining us, because I know that you know, Mike, that, you know, we wouldn't have a show if it wasn't for the listeners of it.

Mike Zaino:
That is absolutely true each and every single week in the local market and everybody that listens to us on podcasts, wherever they listen to podcasts, especially those folks that tune in to YouTube, you know, thank you so much. Because without you, this show does not exist. So our sincerest gratitude.

Producer:
Yeah, it does not exist at all. I know Facebook is a big place where we are as well there on the socials. So just search for money matters with Mike and you can interact with Mike Zaino himself, as he said. Youtube also just search for the show on there. Money Matters with Mike once again. And you can also go to the website or give Mike a call with any of your financial questions. MoneyMattersWithMike.com or call the number 704 560 1573. You can also call or visit the website and get a free report that we have for you that we can send. It is tax free investments for a better retirement. We kind of like to say, Mike, around here, you know, the best kind of money is free money. The second best kind of money is tax free money, right?

Mike Zaino:
Nobody likes paying Uncle Sam. We recognize that it's necessary. We need to keep our roads, you know, intact. I wish they would actually divert more tax money to the roads. Right. But we need to pay our fair share of taxes. And, you know, we also want to make sure that we're not over paying on our taxes. And these ways to cut costs on the taxes are powerful.

Producer:
Yeah, tax evasion is a crime. You know, tax avoidance, if you can, in a way is is is encouraged around here. But hey, if you want that report tax free investments for a better retirement, once again, just call (704) 560-1573. That is Mike Zaino's personal cell phone number. Yes. You don't often get that. He keeps it with him at all times. And he will answer. And if he doesn't answer, he'll call you right back. Okay. Or you can also go to the website. It's MoneyMattersWithMike.com. A lot of great things coming up here on the show over this next hour. Mike, we've got the biggest expenses for retirees today. We're going to run through eight things, according to this AARP survey that really, you know, boils down what you're going to be spending in retirement, what you're going to be spending it on. All right. So a great kind of eye opening list there and things you need to prepare for more people these days. Also saying that they're not going to retire, ever. And, of course, you know, we're going to we're going to go through some things because you may think that now, but you could change your mind later on when the parts start breaking down. They're not doing as well as they are at the moment. So we'll tell you why you need a plan. You're going to have a plan regardless of. Of what happens. Also, Warren Buffett, the oracle of Omaha, he has a list of things that poor people spend money on and they're sort of kind of some financial pitfalls here. So we're going to go through that list of things to avoid. We'll talk about what it's like to work with Mike Zaino and to get some some help planning your financial future. And if we get there, because we got a lot of stuff going on, but if we do get to it at the end this week in history, we'll do that rundown as we like to do each and every time around. But first, let's get things kicked off here with the the main part of the show by going to our quote of the week.

Producer:
And now wholesome financial wisdom. It's time for the quote of the week.

Producer:
And those very words of wisdom this time around come from the 26th president of the United States, Teddy Roosevelt. Theodore, as his mother called him, But we all call him Teddy Roosevelt. In any moment of decision, the best thing you can do is the right thing. The worst thing you can do is nothing. Boy, those are powerful words.

Mike Zaino:
You know, they they are powerful words. I mean, imagine that you are faced with a choice, for example, choosing where to go out to eat for dinner on date night, which I think for married couples is the most difficult choice in the world. Right. If you're married, everybody out there is getting a chuckle out of that or deciding on whether or not to buy something expensive. This quote is saying that, you know, when you're in a situation where you have to make a decision, the most important thing to do is actually make a choice rather than doing nothing. And here is why.

Producer:
Hungry for something to chew on. Here's some meat on the bone.

Mike Zaino:
If you make a decision and it's the right one. Hey, great. You've taken a step in the right direction. But even if you make a decision and it turns out to be wrong, you're still going to learn something from it. Okay? And you learn what does not work. And that can help you make better choices in the future. On the other hand, if you don't do anything and just sit there, you're not learning anything and you're not moving forward. For instance, let's say that you're trying to decide whether to start a small business or not. Okay? If you decide to give it a try and it goes well, well, guess what? Congratulations. You are on your way to success. But if it does not go as planned, what will you gain? Experience. And it'll show you what not to do on the next time that you might try something like that. Okay. On the other hand, though, if you're too scared, even try to start the business, you're not going to gain any experience or knowledge and you won't have a chance to succeed. Now let's apply that idea to managing your finances and making investment choices.

Mike Zaino:
So imagine you're thinking about where to put your money. The best thing to do is research your options and make a choice based on what you have learned. Maybe you invest in a company that's doing well and your money grows. But even if you invest in a company that doesn't do so well, you'll learn from that experience and know better for the next time. On the other hand, again, if you don't make any investment decisions and just keep your money in a savings account. Guys and girls, here's a hint. You might not see that much growth by not taking any action. You're going to miss out on the chance to potentially earn more money through your investments, and you don't get a chance to learn from any mistakes or successes. So in simple terms, Roosevelt's quote is all about making the choices. When you need to decide something, it is better to make a decision, even if it's not perfect, than to do nothing and miss out on the opportunities to learn and grow.

Producer:
Yeah, that's that's great. A great way to think about it too, because, you know, doing something another way to look at it, doing something is better than doing nothing. And I have been there. When you when you said a minute ago, you know, that decision of where to go to eat and that kind of thing for a date night or whatever. Oh, boy. It's like, okay, well, do you want Italian? Do you want do you want Chinese? Do you want, you know, what do you want? And it literally that can be an hour. Like it could be longer than the meal you want.

Mike Zaino:
Well, I want Chinese now. I just had Chinese.

Mike Zaino:
Right? That's barbecue.

Mike Zaino:
I don't feel like barbecue. I thought you said could go wherever I want. Yeah.

Producer:
That is literally how it works. And I can't tell you how many times that has happened to me, but. Yeah, no, but making a decision and just and look, here's the thing. Okay? If you going back to the making a food decision, somebody wants Chinese, the other person doesn't want Chinese, you know. Okay. If you've told them that they can do what they want, just go ahead and go to the Chinese and you might try something different and you might love it. And so that you know something different than what you just had the other day when you had Chinese last time. So it's all about the learning experience. And that is what that's where we learn and where we grow in life. Because without making mistakes, without trying new things, you're just kind of stagnant.

Mike Zaino:
You are. And when you bring up Chinese, you know, it doesn't have to be just Chinese. There's Asian food, there's Thai food, there's Korean food, there's Japanese mean, there's liotia. I mean, there's all kind of Asian food. In fact, I could probably eat Asian food eight days a week. I love it. That's how much. I love it. And I'm Italian, so we rarely go out to eat for Italian food. So imagine that.

Producer:
I love that. Yeah, I could. I pretty much could do the same thing. We lived when I lived up in New York. We lived down the street from a great Thai place. And I could yeah, I could have gone there literally every day. But my budget did not allow, thankfully, because I would have blown it all on instead. But yeah, just great, great stuff there and great, you know, inspiration from the nation's 26th president, Mr. Theodore Roosevelt. And of course, folks, if you want help in in making those decisions, reaching out, trying something new, taking that that sort of leap of faith when it comes to your financial future. I know a guy who can help you out. And his name is Mike Zaino. He's that Italian guy who loves Asian food. And he will be able to help you out by giving him a call. You can do this. It's a simple thing to do. Just pick up the phone and punch those little numbers in. You know how it works. (704) 560-1573. That's (704) 560-1573. You can also check them out on the website MoneyMattersWithMike.com. Reach out there through the contact page and get some get some help. Speaking of spending money on things which we do quite a bit around here, talk about, we're going to look at a new survey that was done by AARP where they looked at the biggest expenses in retirement.

Producer:
And this is a great thing to do, I think, because it'll really it really does help put things in perspective and kind of help people map things out. Right. For for where the money is going to go and what's going to what's going to, you know, suck away that very limited finite thing that we call money. Right. So and some of these expenses in retirement, I don't think are going to necessarily surprise people. But there could be some things like about the distribution of where these things go and and you know, how much you're paying now compared to how much you will be paying in the future for a lot of these things. Right? So here's here's the thing that we want you to know. That is number one on this list, on this study by AARP, and that is health care cannot say it enough times, health care, health care, health care. You've got to have a plan for that because it's going to eat away a big, big chunk. And according to this study, the biggest chunk of your budget.

Mike Zaino:
Yeah. I mean, you know, all the spending categories in your retirement. This one specifically over time, because what happens to our bodies over time. Right. Will likely be the biggest, especially when you start to consider some of those long term care needs. And if you're in reasonably good health, health care spending should be relatively low once you retire, but then start to jump as you get into your 80s and beyond. And these expenses are often less for men, believe it or not, because we give up sooner. We die first, okay? And we rely on our spouses and our families to take on those caregiving duties. Well, that means that the surviving spouse is often going to have to pay for their own caregiving costs, which tend to vary in different areas of the country. And health care costs have seen and they'll continue to see faster inflation rates than any other spending category. And and they're actually projected to climb about 5% each year over the next 30 years, which is about twice the rate of all the other expenses put together.

Producer:
Yeah, that's kind of crazy. You know, you look at the the Federal Reserve always has that 2% goal, that 2% target for for inflation year over year. And so, you know, if you think usually we'll run about two and a half, something like that kind of on average So double that. Yeah. That is how much your health care expenses are going to rise in general, according to these numbers over the next 30 years. And that is that's going to add up big, big time.

Mike Zaino:
Well, definitely.

Producer:
And then number two on the list, Mike, actually kind of goes hand in hand with number one, because we're talking about fitness and wellness here. And really, you know, it's a situation where people who invest in their health and their wellness can cut those health care costs.

Mike Zaino:
Yeah, I mean, obviously the healthier you are, the less health care needs you're going to have. And that can be anything, you know, from gym memberships to yoga classes to buying a peloton or a stationary bike at the house and really important quality shoes. Okay. The more retirees spend on fitness and wellness, the less they're going to end up or could end up spending, I should say, on medical costs and long term care. So don't be afraid to spend a little bit of time and money to improve your health and fitness. Trust me, it pays to be healthy.

Producer:
That is literally true in the majority of cases. Number three.

Mike Zaino:
Here's that.

Producer:
Here's that. That four letter word. That's not four letters. Taxes.

Mike Zaino:
Yeah, it's actually five letters, but it is four letters in my book. Even though it seems like taxes might decline when you retire, that is not always the case. Okay? The government might change the rules on you unless you have planned to be in a lower tax bracket. It may end up that you're in the same similar tax bracket. Okay. So as the federal government looks for ways to reduce the federal deficit, that's the national debt that's likely going to result in higher taxes. Okay. Their best option is to increase the taxes or cut spending. So what do you think the government is going to do? You think they're going to spend less? No, they're going to tax more. So which strategy would you expect to use? Well, that's likely where a Roth IRA and life insurance can come into play as part of your financial plan as to two of the only truly tax free investments that are available to Americans today. So if you want to take advantage of a complimentary no obligation consultation, just to see how one of those tax free strategies or both of them could help you during your retirement, give me a shout. (704) 560-1573 or go out to us on the website and reach out at MoneyMattersWithMike.com.

Producer:
That's right MoneyMattersWithMike.com It's the name of the show and it's the name of the website that's that's pretty easy to remember their number for Mike and this is one that I know can be a real reality check for people is home maintenance because if you're a homeowner it's all up to you. It's not like, you know, when you might have been younger and you were renting an apartment or whatever, and you just call up the maintenance guy and they took care of it. This is it's all on you. And those costs can really rack up the older the home gets.

Mike Zaino:
Right?

Mike Zaino:
If you plan to stay in your home to at least a good chunk of your retirement, you'll likely see that your home maintenance costs will jump considerably. And that's because you'll probably have to hire services to take over some of the tasks that you've been used to doing for years. Okay. And that includes hiring pros to do everything from cutting your grass to cleaning your gutters to, you know, window washing, especially if you have 2 or 3 story homes. Home cleaning mean something as simple as using a ladder as you age in your 70s and 80s probably isn't a good idea. Okay. And so, you know, the cost of home improvement is is not going down either. And you need to be prepared for those, you know, circumstances when the water heater breaks, when your air conditioning gets so stressed out in the summertime that it gives up. Right? So you want to make sure that you're not having to tap into retirement money in order to cover those expenses.

Mike Zaino:
Yeah, that.

Producer:
That definitely was a scenario for my parents a couple years back when their AC went out in the middle of the summer and they had to have it replaced. And then all of a sudden there, you know, they got $10,000 worth of air conditioner they got to pay for. And it's like, okay, where is this coming from? So you need a plan for that. You got to prepare for it. And that, again, is something that Mike Zaino can help you with, folks. Number five, utilities. And this is something to, you know, think that that people might be surprised at kind of how the math works out here because over time it's going to add up. But you might not be spending quite as much, you know, at first in retirement as you as you have been when the whole family's living at home, you know.

Mike Zaino:
Correct. That's actually one of the few expenses that could actually decrease during retirement. You know, for one thing, you typically don't have to pay for your children that like to take long showers. I have daughters and they were famous for going in there and taking 45 minute to an hour long showers and then we got to take it. We have no hot water. Um, they're not going to be cooking at all hours of the night. Also, you know, as we age and you have those 4 or 5 bedroom homes and the kids move out and you're empty nesters, people tend to downsize their homes, which is going to require less heat, less air conditioning, less overall utilities. Okay. So nonetheless, the rates that utilities charge, all customers will continue to increase annually just due to inflation. But because you're not consuming as much of it, your actual net cost will go down.

Producer:
Yeah. And that, you know, the inflation cost is one thing. Another thing too, like, you know, utilities will find other ways and other excuses to raise their rates too. I mean, here in Georgia, we have this big new nuclear plant we got to pay for. And so our utility rates are going to be going up because of that and and things like that, too. But, you know, things that are completely out of your control can cause an increase in that rate. But as you said, Mike, you can control the the actual amount that you end up paying in the end. Yeah, absolutely. Ken Well, and then also. So utilities was number five. Number six on this list. Transportation, you got to be able to get where you want to go and where you need to go.

Mike Zaino:
Yeah, and this is one of the most important areas of retirement spending, but one of the least considered. I mean, think about that. Most people think they're going to be driving for the rest of their lives. Well, as people age, retired folks often rely on other people to help them get from place to place. And whether that's an Uber ride to a doctor's appointment or a cab ride to the grocery store and back, many retirees are also downsizing their vehicles. All right. So they they don't have two vehicles, but they go down to one just to cut costs. So keep in mind, if you purchase a new car before or during retirement, you're going to face multiple transportation costs ranging from the payments on the vehicle to the maintenance on the vehicle to the gasoline, or if you're, you know, driving an electric vehicle, you're going to have higher electric bills. And then, of course, auto insurance. Right. So you cannot escape it. And that's one of the least considered things is the transportation expenses.

Producer:
Yeah. And bouncing right off of transportation. Speaking of going places, travel is number seven and a lot, especially early in retirement, a lot of people will see the travel spending part of their budget increase big time.

Mike Zaino:
Yeah. If you break down, you know, travel and retirement into a 30 year block, right. The first ten years, we call those the go go years. Those that's when you're going you're still young, you're still energetic, and you can go out and walk. You know, my wife and I recently went to Europe, and during that trip we went to a bunch of different cities and we walked 134 miles over the course of, you know, the time that we were there. There is no way that my mother could have done that, you know. So those are the go go years. All right. The next ten years of your slow go years. All right. And then you may go back to, you know, some places where you enjoyed going before, but you're not going quite as often. And then the last ten years, those are your no go years. That's when you're sitting on the on the back porch sipping a lemonade, watching the young youngins and the and the grandkids get out there and and play. So, you know, if you're young enough and you're healthy enough and you have the ability to go places, get out there and travel, go to any of your bucket list destinations while you are still young.

Producer:
Check off those destinations off of that list. Definitely. Number eight. People love to spoil the grandkids. So number eight is kids and grandkids, I would say grandkids and kids. I'll put put the grandkids ahead of the kids because they're the ones that you got to spend money on and spoil when they come along.

Mike Zaino:
Yeah, I actually recently met with a couple and when I analyzed their expenses, I couldn't believe. And the and the the the woman was kind of just like sheepishly grinning in the and the and the husband was looking at her like you spent that much on the grandkids, you know, you know, because they just lavish them and they're taking them here and they're taking them there. They're helping them pay for school things. They're helping them pay for, you know, sporting events. And a lot of retirees also choose to pitch in and help pay for the grandkids college education. Okay. And so when we look at the number of grandkids that folks have, most folks or I should say many folks tend to overspend on the first grandchild, then when the next grandchild comes along or perhaps several more, they're likely to try to match that same generosity, even if they can no longer afford it. Right. Because if you did, for one, you got to do for the other. So you need to be mindful of these expenses and opt to spend more time, not necessarily money with your loved ones. It's those memories that will last a lifetime.

Producer:
Yeah, absolutely. The in the long run, the grandkids, the kids, they will appreciate and cherish those memories that they make with you more than anything else, any, any gift material thing that you could have bought them. And here's the thing. Don't be uncertain or don't be unprepared about any of these expenses that we've just been talking about. You know, reach out to Mike Zaino. You can talk about that. You can plan for whatever comes your way and you can achieve the retirement that you deserve because you have worked hard for your money. You want it to work hard for you.

Mike Zaino:
You know, this.

Mike Zaino:
Is why we spend so much time, so much effort focusing on the strength of your income plan. Right. Your income plan, because you need the paychecks to cover those everyday expenses. But you also need the play checks to enjoy your lifestyle and your free time in retirement.

Producer:
It all begins with a free, complimentary consultation and analysis of your situation. Mike Zaino will take a look at where you are now and where you are headed and then where you could be headed if you might change a few things. And we'll talk about this more later on in the show. But it's like, you know, if your plan is working great for you, that's that's great. Awesome. Wonderful. You can. Part ways and no hard feelings at all. But chances are there are some things that you could be doing better. And so if you want to start down that road, go to MoneyMattersWithMike.com. That's all one word MoneyMattersWithMike.com or give Mike a call at (704) 560-1573. And of course Mike you know all of our shows we tend to focus quite a bit the majority of our time together on retirement. Well, what if people are listening and they say, well, you know, I don't think I'm ever going to retire. And there could be a few reasons for that, but I think there are probably more and more people out there who are listening who think that way. And the numbers really bear it out. In in a recent survey here by Axios and Ipsos, more and more people are saying that very thing, that they're not going to plan to retire at all.

Mike Zaino:
Yeah. Yeah.

Mike Zaino:
The definition of retirement has has evolved really over the past few decades, hasn't it? You know, many of you out there listening might remember the day where you worked for one company for 30 to 40 years. You retired, you got the gold watch, you earned the pension, and then you retired down to a warmer climate. Um, that's no longer the norm. Is it okay? With the rise of remote work, people can now work from anywhere. Many businesses also offer more flexible work schedules, allowing employees to create an ideal lifestyle even if they aren't retired. So in a July poll that was conducted by Axios and Ipsos, 29%. All right. 29% of workers under 55 years of age answered their retirement question with I don't think I will retire. And so, you know, if that's because of necessity, because you have so much, uh, monthly expenses, then that's kind of a sad thing, right? Um, but on the other hand, people like to be socially engaged. They like to be mentally engaged. They, they like the extra jingle that it puts in their pocket. But regardless of whether you love your work or you must continue to work for financial reasons, it is still a really good idea to have a plan in place.

Mike Zaino:
Yeah, right.

Producer:
And several reasons for that, Mike. I mean, I can think of many off the top of my head and we're going to run down a few of them here. But it's, you know, we always say because anything can happen in life, life happens. Life happens to us every day. The unexpected happens to us all the time. So and knowing that and knowing that anything can happen, there are plenty of reasons why you still need to plan for your financial future and and, you know, plan for all the different things that could possibly happen. One of those goes back to kind of that that list of those big expenses in retirement that we were talking about, what was number one, it was health care. So health reasons, your health is not going to always be the same as it is today. So you got a plan.

Mike Zaino:
That's pretty.

Mike Zaino:
Much a guarantee. Okay. And while working forever seems like a possibility, when you're younger and you're feeling well, getting older does come with a high risk of fragility. Heck, I'm 52. I'll see 53 my next birthday. And sometimes when I wake up in the morning, my knees act up a little bit, right? My wrists act up my shoulders act up. Guess it's from, you know, the sports that I played, the jumping out of airplanes that I did when I was in the Army. But I can tell people, you know, 2 or 3 days before it's going to rain because I can you know, my body just reacts to the barometric pressure. So think about what happens if your health should fail before you're ready to retire, Right? You're going to want to have a plan in place for when you can't work anymore. And it is very important to have that financial plan, you know, when when you're not able to go back to work. And that means investing in tax advantaged retirement accounts, having enough set aside to pay for health care, especially because, again, as we age, our body breaks down.

Producer:
Yeah, it's so true. The parts don't quite work as well as they used to. The older and older we get. So there are repair costs associated with that, much like we were talking about cars earlier. Same thing with the human body maintenance. That's that's it. Absolutely. And so number two to the reason that you're going to want to have a plan is to really to have a tax plan because you're going to want to be able to save on taxes not only now but also later on in life.

Mike Zaino:
Yeah, like I said before, you know, nobody has ever said to me, Mike, I think taxes are going down in the future and while continuing to work can help you fund your lifestyle indefinitely, not funding a retirement account might actually cost you money. Okay? Retirement accounts allow you to invest your income in a tax advantaged way, lowering your income taxes now or in the future. And if you choose a. Roth IRA, or if your employer offers a Roth 401. Or Roth 403 B or Roth Thrift Savings Plan. If you are a federal employee and you contribute to that, you can actually save on taxes in retirement as well because you're getting the taxes paid at a known rate. And another thing that almost nobody from a percentage standpoint actually takes advantage of are these things called health savings account. They allow you to use your money, the funds deposited into those accounts tax free for any medical or health expenses at any time, which saves you another huge chunk of change. And I'll ask people that don't have that. I'm like, You really like paying unnecessary tax? And they look at me like I'm, you know, crazy. I'm like, well, when you go to the doctor, you know, you're paying tax on that money. Wouldn't it be better to use tax free money? And they're like, Yes, it would. So they open up a health savings account.

Producer:
There you go. When they're like, well, you know, when you put it like that, it makes a whole lot of sense. Um, but.

Mike Zaino:
Yeah, unless you want to pay more.

Producer:
I mean, that's really what it boils down to, you know, like I wasn't always very good at math in school, but that math makes sense to me. And so there you go. So and, and what was it, Mike, that we were talking about earlier? Right, with our quote of the week, the people having a tough time making decisions and people constantly kind of changing their mind about what they want and all of that, I'll just make a decision for crying out loud. Well, this next reason to have a plan, even if you think you're not going to retire, you might very well be in that boat and change your mind. It might sound like the greatest idea in the world right now. Best thing since sliced bread. I'm going to keep working until I keel over. And but, you know, when a few years down the road comes, you might you might be tired of that job.

Mike Zaino:
Yeah, you might be. And this is another key aspect and a critical reason why you need to have a financial plan for retirement. Because if you don't have a plan, you might actually be anchored, be stuck in your job. If you never save for retirement, but decide one day that you no longer want to work. Um, you don't have the choice, right? Unless you're only going to depend on Social Security, which is going to be bankrupt in ten years. Okay? So by saving money in retirement accounts, you're paying yourself first by having those funds set aside just in case, you know, for the golden years when you decide to actually call it quits, even if you love working now, you still want to retirement to be an option, at least for you later.

Mike Zaino:
Yeah.

Producer:
Don't cut yourself off from options for your future and anchor yourself to that job, as you say. Also, RMDs required minimum distributions. Those are things that can come and bite you if you don't have a plan.

Mike Zaino:
So many people have no idea what RMDs are. And if you're listening to this show, whatever you're doing right now, just stop for a second and really kind of hone in and RMD is the IRS way of requiring minimum distributions. That's what the R the M and the D stands for required minimum distributions. So let's say that you've been saving in a 401 K and you've tax deferred all of that money whether you know you need it or you don't need it. At age 73, as it currently stands, they're going to come knocking on your door and they're going to say, all right, time to pay the piper. And you're they're going to force you to take minimum distributions. Why? Well, so they can collect the taxes on those distributions, even if you never planned and don't need the money, the government's going to require you to take them. Okay. So RMDs are in place for all pre-tax retirement accounts. Again, whether it's a 401 K, a 403 B, a TSP, a traditional IRA, so that you simply cannot shelter your retirement funds forever. You actually have to start drawing those the year that you turn 73. Okay. Here's a retirement tip though. If you are to systematically move your tax deferred money into a Roth IRA by paying the taxes, that's called a Roth conversion. Okay. You can roll those funds over and then those monies will continue to grow tax free for the rest of their lives. And you won't be subjected to RMDs. And a bonus is that Roth IRAs also pass on to your heirs upon your death tax free?

Producer:
Yeah, and that's another, as you say, just a bonus, the cherry on top, as it were. And all of this to say, you know, because we don't just say these things just because we want to be the boogeyman and scare you into a retirement plan here, we're helping because of all of the what ifs in life like. You said at the beginning of this part of the show, I mean, anything can happen. Life does happen. So there are all of the what ifs that we just really do need to plan for. And, you know, you say, well, I don't have a crystal ball. I don't know what's going to happen. Well, none of us do. But you. That's why you need to work with an expert who has done this for years and who has seen these things happen and knows what you need to plan for.

Mike Zaino:
Absolutely, Matt. I mean, what if your company goes out of business? Okay. If the company you're working for goes out of business, you might be forced into retirement against your will. Sure, you can get another job, but if you can't find a company to take you on, you might be out of luck or have to work, you know, for minimum wage or be way over qualified for what it is that you know you want to do or you're actually doing. What if you get fired? Hey, it could happen. Okay. No one plans on getting fired, but a change in management or a change in the direction of the company could result in your job being eliminated. What if a close family member needs your help? All right. Even as you are in perfect health and you live until you're 100 years old, you might need to take care of a close family member as well as you get older. Okay. And if you become a full time caregiver, you're going to have less time to work at a job. So, you know, the what ifs are huge in life and you need to be prepared for them.

Producer:
Yeah. And to start on that journey of preparation for all of those different what ifs and more that we just mentioned and the infinite number of what ifs in life that are out there. It's all about reaching out, getting started with that complimentary consultation. Talk about that experience, Mike, and kind of what that's like for the listeners.

Mike Zaino:
Yeah. So anybody that calls me the first call we're going to have is a discovery call. It'll be, you know, ten, 15, 20 minutes. We'll just spend some time. You'll ask me some questions, I'll ask you some questions. We'll get to know each other and decide if a comprehensive consultation again, at no cost to our listeners and no obligation either is actually warranted. Okay. But if it is, we are going to take a deep dive into your financial situation and help you analyze different aspects of your current plan. If you have a plan and if you don't have a plan, we're going to get you a plan. Okay? So we're going to look at how much you're paying in fees. We're going to help you cut any unnecessary costs, whether those are in your IRAs, your 401. Ks or any other types of retirement savings accounts. If you own an annuity, we'll look in closely, examine, do almost what we call an annuity x ray to see if you are paying unnecessary fees, if they are going to charge you to pay you your own money. That's not the best type of annuity you want to be in. Okay. Um, you know, some people have heard that annuities are bad. I actually think that some annuities are phenomenal and there are some that I wouldn't put my worst enemy into. But, you know, if you're of Social Security age, we can help you with Social Security maximization planning if you're of Medicare age, because Medicare can be extremely confusing with the four different parts plus the supplements that are available. We can make that make sense in plain English to you. And the bottom line, folks, is we're going to compare what's possible if you work with us to what your current situation is. And we remember, we know, hey, it is your money. And if it's important to you, it's important to us.

Producer:
And that's why you need to go to MoneyMattersWithMike.com. That's MoneyMattersWithMike.com. That's the website that you can check out there with previous episodes of the show. A lot of great info and the all important contact page to get in touch with Mike Zaino for that complimentary consultation. Or you can call the number 704 560 1573 And schedule your free consultation as well. Well the last chunk of the show here, Mike, let's let's spend it talking about the Oracle of Omaha, shall we? Because when we talk about Warren Buffett and that is who we're talking about, folks, in case you were wondering, Warren Buffett, when we talk about someone who knows a lot about money in general, but specifically about investing, you know, financial planning on on this very large scale, that he does it. You know, we think about someone who we should listen to when he speaks about money because he speaks from experience. Right? So he's he's got this list of things that poor people spend their money on that we and I will include myself in that, especially compared to Warren Buffett. I think we're just we're all very poor compared to Warren Buffett. But things that poor people spend their money on that we shouldn't spend our money on. On because it can be wasteful. And this you can be and not even necessarily wasteful, I would say, and some of these things. But you could be putting your money to use in a much better way than this list of things, right?

Mike Zaino:
Yeah. Mean and for those of you who have never heard of Warren Buffett, don't know what rock you've been hiding under, but we're talking about one of the most successful investors in the world. And he has a reputation for such simple yet profound financial wisdom. And by addressing some of these common financial pitfalls, we can all make more informed financial decisions to ensure that our money serves us well. And the first one on his list is actually not what you spend your money on. It's neglecting to spend money on personal development. Okay. According to Warren Buffett, the very best investment that one can make is in one's self. Okay? Enhancing your skills, enhancing your education that can boost your earning potential significantly because your knowledge and your abilities are assets that no one can take away from you.

Producer:
It's so important to invest in yourself. Definitely, definitely. So. Also something that on the other side of that coin that people spend money on that we should not is really guess. This boils down to spending too much money on credit card interest, right? Relying on credit cards, especially if you have revolving balances. That interest is going to compound and you'll just be in over your head in no time. Chances are so relying on credit cards, that is the number two thing on this list.

Mike Zaino:
It is.

Mike Zaino:
And credit cards can be convenient, let's face it. Right? It's real easy to reach in, Grab that plastic out, tap it, insert it, swipe it however you're going to do it. And voila, you just had a piece of plastic in your thing. You didn't have to pay for it with real money. But guess what? Those high interest rates can quickly overshadow any benefits if you're not paying the full balance off each and every single month. And so Warren Buffett advises against just needless spending that could eventually lead to credit card debt and your inability to pay off the full balance, or at least the statement balance at each and every month. Because if you pay the statement balance, you're not going to pay any interest whatsoever.

Mike Zaino:
Yeah.

Producer:
And that's, you know, credit cards can be a great tool, you know, especially if you have one that you can, you know, you earn travel points or whatever things that you can earn, but they can so easily and unintentionally be abused, especially if you find yourself in a difficult financial situation. A credit card is not an emergency fund and should not be looked at that way. But all too often people think, oh my gosh, okay, well I need so and such work done on my car and don't have the cash on me and don't have my emergency fund. So I'm just going to put it on the credit card. Well, that's not really what the credit card should be for In an ideal world, unless you do have that money somewhere, you just want to earn the points and you you pay that balance off at the end of the month. Like you said, it's a trap. Really.

Mike Zaino:
It is a trap.

Mike Zaino:
And so, you know, the biggest thing is, is don't spend beyond your means If you can't actually pay that that thing, whatever it is that you just purchased off in full at the end of the month, then you can't afford it. Don't buy it. Okay. So the next thing on this list is, is probably geared toward the younger generations and that's just going frequenting bars and going out to the pubs and the clubs. And when you spend money on activities like drinking at bars or, you know, cover charges to get in, that can add up and instead opting for a more affordable social gathering like at home get togethers can help cut costs. Now, I know that for the longest time we were, you know, by law we couldn't go out, we couldn't do anything. We had to stay at home because of the pandemic. And now it seems like everybody's going out again. But reducing your alcohol consumption and going out and paying, you know, sometimes double, triple or quadruple for what you could do it at home for is also going to not only help your your bottom line and your pocket, but it'll also lead to a healthier lifestyle.

Producer:
Yeah, absolutely. Your liver will thank you your waistline will probably thank you as well. I've I've actually done that you know cut back on all of that, especially going out and buying alcohol out at dinner or even just going and having a few drinks with friends and stuff because yeah, the wallet and the the health situation will definitely improve once you once you do that, chasing the latest technology is another thing. I used to be really like super guilty of this. I felt like I had to have the latest and the greatest as soon as it came out. But then, you know, I sort of realized, okay, so every time they come out with a new. Model of phone I don't like. I don't have to have it because my old phone chances are it works just as well and is going to be just as as good for the next 2 or 3 or even more years probably.

Mike Zaino:
Yeah, no.

Mike Zaino:
Doubt. And thank God this is not one of the traps that I fell into. Okay. I finished college the year before the Internet was invented. So technology to me, you know, is not all that, you know, got to have it, got to have the latest and greatest. But you know, if if you're younger than than 50. Okay. Those new gadgets may be tempting, but often last year's model serves you just as well. And Warren Buffett himself has a history of sticking to functional rather than flashy. Okay. And so he still rides around in his, you know, old beater vehicle. Um, that's been paid off for probably, you know, 50 years, which is, which is awesome. Another thing, when you buy those new phones, especially with Apple, right, then you got to buy all new charging, you know, all the new charges because, you know, that's one of the things that think they're passing a law and putting it into effect to try to, you know, knock down the excess wires that are in landfills. Okay. And I don't think Apple likes that because they were able to charge more money every time somebody bought a new phone or a new gadget, new iPad, new computer, new this, new that. And now it seems like everybody's going to the usb-c, which is universal.

Producer:
Yeah, exactly. And and that's the thing, too. You know, the other part of it, it used to be, you know, the charger was like super wide at the bottom of the phone and you could plug it in. And a lot of times you check into hotels and they would have that adapter thing in the like attached to the alarm clock or whatever, and it'd be like, Oh, this is so cool. And high tech. Well, now if you go to a hotel that's got that, you're like, okay, how long has it been since they've updated this? But you know, those adapters have changed. The the headphone jack on the iPhone is no more like it's all of these things change and they do it not only because it's maybe it's better technology whatever they do it because of the almighty dollar, because of their bottom line. They they, you know, want a nickel and dime you and rope you into sticking with their products and having to purchase something new on a constant basis. That's how they, you know, keep making their money and the clothing brands as well. They keep making their money because, hey, styles change. Right? And so overspending on clothes, that's another thing that's on Warren Buffett's list.

Mike Zaino:
Yeah, It's funny how how, you know, clothing trends are, you know, cyclical. Right? I mean, what was in the 80s is actually now starting to come back again here 40 years later. It's kind of funny. But, you know, Buffett, along with other billionaires with a B, they lean towards simplicity in their wardrobes, classic durable clothes, you know, over flashy, expensive brands that can result in obviously a significant saving and shopping for vintage clothing that fits your style can be an affordable cost cutter and a fund activity during retirement. This is something I'm actually proud of, of my daughters for. You know, they're 26 and 22 and they love to go thrifting and they find some really, really good bargains on some really, really nice clothes. And they pay, you know, three bucks for it, five bucks for it. Occasionally they'll pay $12 for something that might have originally cost hundreds. So I think that, you know, being a little bit more frugal on your clothing is awesome. It's also why a lot of, you know, the tech people, they they just wear the same hoodie and the same blue jeans every single day so that they don't even have to worry about what it is they're going to wear. They have, you know, a bunch of black hoodies, a bunch of white t shirts and a bunch of blue jeans and that's it.

Producer:
Yeah, that's all. Yeah, that's their uniform. And it has multiple reasons behind it. As you said, they're also so buying new cars. That's another thing on the list here. And you mentioned Warren Buffett. This is he leads by example on this one because he's got that old beater that, you know, as you said, has been paid off for a long time. New cars, I mean, what's the what was the old adage? It goes down in value by like 10% or something. As soon as you drive it off the lot, Right? I mean, it really.

Mike Zaino:
It's higher.

Mike Zaino:
Than that. I think it's like 20%.

Mike Zaino:
You know, probably.

Mike Zaino:
One of those things where, you know, I always looked for and I've bought a lot of vehicles, but I try not to buy new. I mean, I think I'm at my 53rd vehicle. I like to drive new every two or new every three years. And so I'm constantly churning. But what I've learned through the process of purchasing all of those vehicles is you need to put yourself in a positive equity position. So let somebody else drive the car off the lot and take the kick in the gut. Because even if you've got a car that's just been titled, okay, and then it's returned a week later, if it's been titled, you can often get, you know, a 15, 10 to 15% discount below Msrp. So, you know, having pre-owned cars and holding on to them for as long as they're reliable instead of falling for that, you know, that allure, that trap, you get the, oh, look at that. And then then you. Start obsessing over having the new car. Well, if you're still getting you from point A to point B and it's mechanically sound and the air conditioning still works, then drive it until the wheels come off.

Producer:
That's true. And mean, you know, too. You can always, if you want and this kind of goes back to the the technology thing. But let's say if there's something you feel like, oh, people have, you know, what is it, Android Auto or Apple, CarPlay or whatever in their cars. And I feel like I'm missing out because I don't have that technology. There are, you know, other pieces of technology that you can buy, like little add ons that you could buy for even your old beater car. That will give you some of that latest and greatest stuff. And it doesn't cost you nearly as much as a new car and you're not going to be dealing with the depreciation and all that stuff. So if you feel like you have to have something like that, try to resist the temptation. A But there are alternatives to buying the entire new car.

Mike Zaino:
If you want some pointers on how to negotiate the best deals. (704) 560-1573.

Mike Zaino:
That's right.

Producer:
Not only can he help you by, you know, planning for that financial future, but also, you know, a big part of your finances now is that vehicle. And so call him 704 5601573 for Mike Zaino also. So you know what happens every new year that rolls over on the calendar? I do. Everybody makes the New Year's resolutions. Everybody goes out to the gym and there's I am all in. I'm going to be here at the gym every day. And by the time the second week of January rolls around, if you make it that far, you've completely forgotten about the gym.

Mike Zaino:
It is.

Mike Zaino:
Absolutely amazing. You know, when when I was regularly going to the gym before I was traveling so much for business, I would actually, you know, in January it was you couldn't get you couldn't get in. Right. It was it was ridiculous. But by February it was, you know, about halfway full. And by March, forget it. It was ghost town in there. And you could just go in and and from March all the way through the end of the year, it was it was, you know, business as usual. But unused gym memberships are going to cost you a lot of money. Okay? Especially when there are free, you know, apps that you can download on your phone and cast to your TV or there's low cost fitness routines. Those can be just as effective if regularly practiced. I mean, in the military. Okay, we did Stanford physical training. We would do push ups, we would do sit ups, we would do, you know, running, we would do pull ups. We mean you can you do dips on the edge of your table or chair. I mean, there are lots of things that you can do just using your own body weight instead of paying money for something that you're not going to use.

Producer:
Yeah, a much better use of your of your financial resources to go somewhere else, like planning for your future instead of going to just waste unnecessary subscription services. Speaking of that, I mean, do you need all of the streaming services? Do you need the thing that sends you new clothes every month or the the raw food that you have to cook and it sends you the recipe Like, do you need all of those things? Chances are probably not.

Mike Zaino:
No. Cancel those that don't provide value. I mean, if you if you got HBO Max to watch Game of Thrones and Game of Thrones is not on anymore and you're not watching HBO, Max, cancel it. I mean, it's just that simple.

Producer:
It's so true. And it's funny that you actually use that analogy because we just finished watching Game of Thrones like probably a month or two ago. And I've it was such a it was such a great show, disappointing finale, but such a great show overall. And that's all I'll say about that. But it's such a wonderful, wonderful show to get hooked on regular nights out. We sort of talked about this a little bit earlier. But yeah, I mean, going out and spending time out is definitely more expensive than doing it at home.

Mike Zaino:
Yeah. And I think this one is more toward the older listeners to our show. I mean, the younger listeners, they're the ones that are going out to the bars and the pubs and go out and heavily drinking. And then when you, you know, age in a little bit and you're married and the kids are grown and you're having date night and you're going out now you're going out to eat. And, you know, my wife and I, we go out at least once, sometimes twice a week. Well, those frequent nights out, if you're doing that more and more often, they can be a significant expense. I mean, I joke about I'll leave $100 bill in the driveway before I pull out. If we're going out to a nice dinner, you know, having an appetizer or having a a glass of wine or a cocktail, you know, having a couple meals, doing a dessert. Yeah. I mean, a hundred bucks is very, very easy to spend. And if you're doing that night in and night out, that is going to significantly add up. And so opting for budget friendly alternatives like home cooked meals and movie nights at home, those can court costs, can cost cut, those can cut costs considerably. A little alliteration that got me tongue twisted.

Producer:
That's easy for you to say. And then another thing, you know, it might seem like Get Rich Quick is the name of the game here, literally when it comes to gambling. But boy, that can eat away at your wealth because it's the odds are always stacked against you when you walk into the casino.

Mike Zaino:
Yeah.

Mike Zaino:
And gambling comes in a lot of different forms, right? It can be at a casino. You can go up to Cherokee here in the Carolinas, you can go up to Atlantic City. If you're on the East Coast, you can go out to Vegas, you can go to California. All the riverboats and in places that they have them and they're allowed. Right. That's one form of gambling the lottery. A lot of folks I know spend a lot of money hoping to hit it. Right. Because when they hit it right, they're going to be paid like millions upon millions upon millions. Heck, the Mega millions was over $1 billion, you know, a couple of weeks back. And so the likelihood of you actually walking out a winner is slim. So understand that the odds and Buffett urges people to make financial decisions that favor their long term wealth accumulation and not momentary thrills that come from those casinos and gas station scratch offs.

Producer:
Very true. And the last thing here on Warren Buffett's list, smoking, because, boy, that can not only cost your health, but definitely the wallet.

Mike Zaino:
I tell you, you know, back when I grew up, everybody smoked. It seemed like I mean, there were smoking sections in restaurants. You could walk into any pool hall and it would just be a cloud, right? Everybody smoked. And then guess around the mid to late 90s, America had a shift. And in America you can hardly find smoking areas anymore. But cigarettes are expensive. I'm talking about over $100 for a carton. Okay. And a lot of instances and people that are smoking two packs a day, heck, one pack a day, that is going to significantly add up. Not to mention the profound effect from a health perspective that it could negatively impact your wallet down the road. So quitting smoking can lead to a significant boost not only in your personal budget, but also in your overall health.

Producer:
MoneyMattersWithMike.com is the website and the number 704 5601573. Well, Mike, that will do it for this time around, sir. But I appreciate you and all of your insights, and we'll do it once again next time.

Mike Zaino:
Matt, thank you so much. If anything here is of value to you, share it. Okay. Don't keep it to yourself. Don't be selfish. Right. A rising tide lifts all boats. And that is why I do the show. The more people we can reach, the more people we can help, the less folks have to suffer financially. So whatever you're doing this weekend, I hope you do it to its fullest extent. And as always, make it a great day.

Producer:
Thanks for listening to Money Matters With Mike. You deserve to work with a financial and insurance expert who can offer strategies for protecting and growing your hard earned money. To schedule your free no obligation consultation visit MoneyMattersWithMike.com or pick up the phone and call 704 560 1573

Producer:
Not affiliated with the United States government. Mike Zaino does not offer tax, legal or investment advice. Consult with your tax advisor or attorney regarding specific situations. Opinions expressed are subject to change without notice. These opinions are not intended as investment advice, nor do they predict future performance of any product. All information provided is believed to be from reliable sources. However, we make no representation or warranty as to the accuracy of any statement. This information is intended to be educational in nature and does not provide a guarantee or a specific result. All copyrights and trademarks are the property of their respective owner. Amara life assumes no responsibility or liability for the content of this message. The information contained herein is provided on an as is basis with no guarantees of completeness, accuracy, usefulness, timeliness or the results obtained from the use of this information.

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